AI-Driven Inventory Optimization with Academy Sports + Outdoors
John Jarrett, VP Merchant Systems Operations, and Kyle Foulkrod, Sr. Director Logistics and Distribution joined invent.ai Founder & CEO, Gurhan Kok, and Chief Revenue Officer, Tav Tepfer to share how they transformed their people and processes and achieved unparalleled results in just a few months.
Learn how they reduced lost sales, ensured product availability, and optimized profitability across diverse channels through AI-driven inventory management, intelligent demand forecasting, and precise inventory decision-making.
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Introduction (Timestamp: 00:12 - 01:50)
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Introduction of John Jarrett, Vice President of Merchant Systems and Operations at Academy Sports, and his responsibilities.
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Introduction of Kyle Foulkrod, Senior Director of Supply Chain, focusing on reverse logistics, vendor compliance, and supply chain optimization.
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Introduction of Gurhan Kok, CEO and Founder of invent.ai, former Duke and MIT professor.
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Who is Academy Sports? (Timestamp: 01:52 - 02:40)
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Kyle describes Academy Sports as a $6.4 billion retailer based in Texas, specializing in sporting goods and outdoor activities.
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Discussion of Academy's store count in 18 states, regional footprint, and distribution centers.
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Academy's Strategy (Timestamp: 02:43 - 03:31)
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Kyle discusses Academy's growth strategy, focusing on new store openings, omni-channel business, and strengthening the base business.
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John talks about the importance of merchandise productivity and supply chain initiatives.
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Managing Inventory Is a Balancing Act (Timestamp: 03:34 - 05:37)
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Gurhan addresses the issue with traditional KPIs like service levels and weeks of supply, and the difficulty in balancing them.
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Explanation of financial optimization in inventory management, converting service levels and weeks of supply into financial terms.
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Gurhan discusses the balance between customer satisfaction through inventory availability and the challenge of excess inventory.
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Metrics don’t align
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Inability to quantify the financial impact
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The Path Forward (Timestamp: 05:38 - 08:17)
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John recounts the journey since 2018, emphasizing the need for improved inventory management and the challenges faced with the ERP system.
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Discussion on the need for smart, flexible solutions and Academy's decision to partner with invent.ai for their unique approach and technology.
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John outlines the priorities for the fulfillment optimization project, including immediate financial impact and fast implementation.
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To meet Academy’s priorities, they had to be open to new ideas and exploring new solutions and partners for effective inventory management.
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Accurate Demand Forecasting System (Timestamp: 08:18 - 10:17)
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Explaining the role of AI in optimizing inventory levels across the network.
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Discussion of how to maximize Gross Margin Return on Investment (GMROI) for each product, location, and day using AI technology.
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Gurhan explains the importance of accurate demand forecasting as a foundation for inventory optimization.
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AI for Financial Optimization of Inventory
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Performance Review (Timestamp: 10:18 - 12:22)
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Academy's evaluation of five different solution providers, ultimately choosing invent.ai due to their quick implementation capabilities.
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John describes the implementation process beginning in June 2018, including historical analysis, simulations, and an AB test with 50 stores using invent.ai and the rest on the legacy system.
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By July of the following year, full deployment across all stores and categories for both DC and store replenishment was achieved.
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Transforming the Team (Timestamp: 12:23 - 13:38)
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The organization was initially dictated by the applications of the legacy system, leading to a complex process across different teams.
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Introduction of the 'Hub Team', composed of invent.ai data scientists and Academy SMEs, focused on strategy and business performance, while invent.ai automated the tactical execution.
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Demonstrated Business Impact from Technology - Fast Path to Margin Increase and Proven Revenue (Timestamp: 13:40 - 14:52)
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Major KPIs tracked: sales, margin, and turnover.
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Observations of improved in-stock levels, inventory reduction, and reduced clearance percentages.
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The impact of these changes contributing to Academy's transition from a private to a public company in 2020.
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A/B Testing (Timestamp: 14:53 - 16:06)
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Gurhan presents examples from other retailers to demonstrate the impact of their technology.
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Example of a department store with 2.87% higher sales and a grocery retailer with 11% inventory reduction and 1.7% improvement in availability.
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Traditional Warehouse Process (Timestamp: 16:07 - 17:23)
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Kyle describes the traditional warehouse process, emphasizing the time and labor involved in each step, which impacts in-stocks and requires more inventory.
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Optimized Cross-Dock and Flow-Through Warehouse Process (Timestamp: 17:24 - 18:02)
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Discussion of more efficient processes like cross-docking and flow-through, reducing lead times, labor, storage needs, and working capital.
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Solution Architecture (Timestamp: 18:03 - 19:50)
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Details on the architecture of the solution developed with invent.ai, focusing on unfulfilled allocation priority lists and profit maximization steps.
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Project timeline and benefit (Timestamp: 19:51 - 20:33)
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Timeline from the initial hallway conversation in May 2021 to implementation in October 2021.
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First-year results show significant efficiency improvements and benefits in the receiving process and at the store level.
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- Audience Question on Forecast Accuracy Measurement (Timestamp: 20:39 - 21:22)
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An audience member inquired about how Academy Sports measures forecast accuracy and any improvements in this area.
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John discusses the shift from their traditional forecasting system, which required significant manual input, to the new system.
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The new system puts less emphasis on traditional forecast accuracy.
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Academy Sports has moved away from measuring forecast accuracy in the traditional sense. Instead, they focus on direct business outcomes like revenue, in-stock levels, and lost sales.
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The current focus is on broader KPIs rather than just forecasting accuracy or parameter maintenance.
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- Summary by CRO Tav Tapfer (Timestamp: 21:33 - 21:58)
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Tav summarizes the focus on achieving better results by emphasizing profitability and financial impact.
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The importance of achieving faster results through quick implementation with existing systems is highlighted, ensuring that the solutions are integrated into these systems efficiently.
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The ongoing results are emphasized, particularly the role of the hub team model in extending the platform and technology to continually address problems using the profit optimization platform.
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